Happy New Year!
With the new year comes updated IRA contribution rules from the IRS. The changes compared to last year are limited, but the following are some of the most commonly used retirement-related strategies.
- The 401K employee contribution limit remains at $19,500; however, the total Defined Contribution Plan Annual Addition limit has been raised to $58,000, and the Annual Compensation limit was raised to $290,000.
- The Social Security wage base has been raised to $142,000. Medicare, as in recent years, has no wage base limit.
- Individual HSA Contributions are limited to $3,600, and family HSA Contributions are limited to $7,200.
- For those desiring to make direct to Roth contributions, the AGI phase out range for married couples filing jointly is $198,000 to $208,000. For singles and heads of households, the range is $125,000 to $140,000.
- The deduction phase-out for an IRA contributor not covered by a workplace retirement plan applies to a couple with an combined income between $193,000 and $203,000. One member of the couple must be an IRA contributor without a retirement plan through their work, and the other member must have the workplace retirement plan to qualify.
These only represent some of the most frequently used retirement benefit and contribution rules. For more information, contact an advisor who knows your financial situation.
All the best in 2021!